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250 Miller Economics Today, 16th Edition
4) A system of private property rights
A) enhances economic growth by creating incentives to the Fed to maintain stable prices.
B) enhances economic growth by increasing the probability that a person can gain from
making investments today.
C) retards economic growth by serving the interests of the wealthy only.
D) retards economic growth by limiting the options of people who own nothing.
5) Entrepreneurship functions better when
A) the government performs the entrepreneurial function.
B) there is a well defined property rights system.
C) saving is relatively low.
D) most of the population has low levels of education.
6) The immediate effect of increased population growth, with real GDP growth unchanged, is to
A) reduce economic growth by reducing per capita real GDP.
B) increase economic growth by stimulating more saving.
C) increase economic growth by boosting the capital stock.
D) leave economic growth unchanged.
7) According to the late Julian Simon,
A) legal immigrants have a favorable impact on the welfare of American citizens, but illegal
immigrants have a negative impact. However, the positive effect of the legal immigrants is
stronger than the negative impact of the illegal immigrants.
B) legal immigrants have a favorable impact on the welfare of American citizens, but illegal
immigrants have a negative impact that almost exactly offsets the positive effect of the
legal immigrants.
C) legal and illegal immigrants have a positive effect on the welfare of American citizens.
D) legal and illegal immigrants have a negative effect on the welfare of American citizens.
8) A system of private property rights
A) encourages economic growth by creating incentives to invest in capital and to be
innovative.
B) discourages economic growth by discouraging the development of new ideas and ways of
doing things.
C) reduces the efficiency of government, which reduces the growth rate of the economy over
time.
D) encourages investment but discourages entrepreneurial activity, so the effect on economic
growth is uncertain.
9) Entrepreneurship functions better when
A) patent laws are not strongly enforced since they make imitation difficult.
B) government provides technical support to entrepreneurs.
C) a system of private property rights permits entrepreneurs to capture the rewards from
their entrepreneurial activities.
D) universities provide research that is closely interrelated with the entrepreneurial activities.
10) The protection of property rights leads to
A) more poverty. B) more illiteracy.
C) more capital formation. D) unemployment.
11) Entrepreneurs often undertake the innovations that are necessary to bring inventions to the
marketplace. Accordingly, what empirical pattern should be expected in an international
comparison?
A) Countries with higher rates of entrepreneurship have higher rates of poverty.
B) Countries with higher rates of entrepreneurship have lower rates of immigration.
C) Countries with higher rates of entrepreneurship have lower rates of economic growth.
D) Countries that protect the property rights of entrepreneurs will have higher rates of
economic growth.
12) In the absence of well defined property rights, we would likely find
A) people with more incentives to take risks.
B) people with less incentives to take risks.
C) higher economic growth rates.
D) increases in investment activity.
13) Well defined property rights give entrepreneurs the incentive to
A) engage in risky business endeavors in order to accumulate future wealth.
B) use the eminent domain laws to seize property for public use.
C) lobby Congress in order to increase environmental regulations.
D) evade taxes.
14) Would one expect economic growth to be higher or lower in a country that had poorly defined
property rights? Why?
15) Why might population growth and immigration stimulate economic growth?
Chapter 9 Global Economic Growth and Development 253
9.6 Economic Development
1) Economists have found that as a nation s per capita real Gross Domestic Product (GDP)
increases,
A) the rate of population growth declines.
B) the rate of population growth experiences dramatic increases.
C) there is no effect on population growth.
D) the rate of population growth increases at the same rate as economic growth.
2) All of the following are listed in the text as being keys to economic development EXCEPT
A) a system of property rights. B) an educated population.
C) an open economy. D) a higher level of protectionism.
3) What did Malthus say about population growth?
A) Population growth is the key to a nation s economic growth.
B) Population growth is not a problem if food production keeps up, and Malthus predicted
that it would.
C) Population growth is a huge problem if housing and medical care don t also increase.
D) The population would grow faster than food supplies, which would be a recipe for
disaster.
4) Have Malthus predictions about population growth come true?
A) No, because modern birth control has limited population growth in all nations.
B) Yes, as evidenced by the famine and food shortages affecting every nation today.
C) No, because the world s food supply has grown much more rapidly than Malthus foresaw.
D) Yes. The world s food supply, measured by calories per person, continues to fall.
5) The three stages of economic development include
A) the agriculture stage, the manufacturing stage, and the service sector stage.
B) the computerized stage, the agriculture stage, and the manufacturing stage.
C) the feudal stage, the agriculture stage, and the totalitarian stage.
D) the agriculture stage, the manufacturing stage, and the socialist stage.
6) What occurs in the second stage of economic development?
A) Most of the labor force works in agriculture.
B) The service sector comes to the forefront.
C) The manufacturing sector declines in importance.
D) Manufacturing gains in importance and employs a large portion of the labor force.
7) Economists have determined that there are four factors that seem to strongly affect a nation s
rate of economic development. Which is NOT one of these four factors?
A) Establishing a system of property rights
B) Developing an educated population
C) Supporting current industries and the jobs they provide instead of adopting new
technology that brings disruptive social changes
D) Limiting the extent to which the government imposes trade barriers
8) The study of factors that contribute to the economic growth of a country is known as
A) natural resource economics. B) entrepreneurial economics.
C) development economics. D) savings economics.
9) The study of factors that contribute to the economic development of a country is
A) population growth economics.
B) development economics.
C) the theory of technological advancements.
D) the new technology theory.
10) As more economic development occurs,
A) technological progress slows. B) capital accumulation decreases.
C) the population growth rate decreases. D) the population growth rate increases.
11) Which of the following is NOT a stage of development that modern rich nations have gone
through?
A) Service stage B) Agricultural stage
C) Manufacturing stage D) Inflation stage
12) To raise economic development, developing countries should
A) focus on their comparative advantage.
B) focus on producing service goods.
C) produce goods that are capital intensive and not labor intensive.
D) not focus on economic growth.
13) To encourage economic development a country should do all of the following EXCEPT
A) invest in human capital.
B) limit the amount of imports allowed into the country.
C) allow creative destruction to run its course.
D) establish a system of property rights.
14) Creative destruction refers to
A) the destruction of the government system which limits economic growth.
B) the movement from an agricultural society to a service economy.
C) the mechanism for establishing property rights.
D) the creation of new jobs and economic growth after destroying old jobs.
15) Trade between countries should be
A) encouraged for developed countries but not for developing countries.
B) encouraged for both developed and developing countries.
C) discouraged for developed countries but encouraged for developing countries.
D) discouraged for both developed and developing countries.
16) Which of the following factors will NOT increase economic development?
A) Increasing the amount of education in the population.
B) Establishing a system of property rights.
C) Creative destruction where old jobs, companies and industries are destroyed.
D) Increasing the amount of protectionism.
17) The term creative destruction refers to
A) the process by which immigrants build a new life in their country of destination.
B) the process by which new jobs are created and old ones destroyed.
C) the effects of population growth on the environment.
D) All of the above are correct.
18) An economy that is an active participant in international trade is
A) an egalitarian economy.
B) a closed economy.
C) an economy whose currency value fluctuates widely.
D) an open economy.
19) Research indicates that
A) countries with lower tariff rates experience higher rates of economic growth.
B) countries with lower tariff rates experience lower rates of economic growth.
C) there is no relationship between the level of tariff rates and economic growth.
D) countries with higher tariff rates experience higher rates of economic growth.
20) The concept of an open economy means that
A) imports should be limited while exports should be expanded.
B) a nation s borders are open to flows of imports and exports.
C) exports should be controlled but imports should be allowed in without restriction.
D) imports and exports should be restricted.
21) Which one of the following is a key to economic development?
A) the removal of property rights
B) the preservation of established means of production
C) an educated population
D) a high level of protection against imported products
22) The study of development economics is to understand
A) why some products are successful in the market as soon as they are developed, whereas
others do not catch on for years.
B) why most of the patents on record have been given to men rather than to women.
C) why some countries are rich and others are poor.
D) the personality factors that lead people to become entrepreneurs.
23) Which one of the following is true?
A) As a country becomes more prosperous, it experiences a higher birth rate.
B) Over the past century, the supply of food has grown more quickly than has the demand
for food.
C) Over the past century, the real price of food has risen, reflecting the pressure of population
growth on food supplies.
D) Over the next half century, it is expected that population growth in industrially advanced
nations will outpace population growth in developing countries.
24) Which one of the following describes the current state of economic development in the United
States?
A) The United States is running out of natural resources, and therefore it will soon experience
a drop in the rate of economic growth.
B) Employment is declining in the manufacturing sector and growing in the service sector.
C) Employment is declining in the manufacturing sector and growing in the agricultural
sector.
D) The lack of well defined property rights in the United States means that entrepreneurs do
not expect to capture the benefits of innovations they bring to the marketplace.
25) Which one of the following is true?
A) Investments in secondary education produce gains in the form of economic growth.
B) Secondary education does not boost economic growth in developing nations, because so
much of the workforce remains in agriculture.
C) New growth theory suggests that there is no connection between the level of education in
a country and its rate of economic growth.
D) New growth theory suggests that education benefits only those people who receive it, and
not the population as a whole.
26) Which one of the following is true?
A) For every country that experiences an increase in its growth rate, there must be another
experiencing a decline.
B) Small changes in the annual growth rate amount to a measurable difference in the
long term growth trend of a country.
C) Restricting imports will enhance a country seconomic growth.
D) A well defined system of property rights benefits only the wealthy, and consequently it
produces income inequality that will stifle economic growth.
27) What can be expected to happen in a country that enacts trade barriers?
A) The rate of immigration will increase.
B) The rate of technological innovation will increase.
C) The rate of economic growth will decrease.
D) The rate of population growth will decrease.
28) Which of the following is NOT an obstacle to economic development?
A) lack of entrepreneurship B) political instability
C) corruption D) a central bank
29) Which of the following is an obstacle to economic development?
A) poorly defined property rights B) foreign direct investment
C) immigration D) openness to trade
30) A good estimate of the world s population that lives on less than an inflation adjusted$1.5 per
day is
A) 20 percent. B) 40 percent. C) 50 percent. D) 80 percent.
31) Thomas Robert Malthus believed
A) that food supplies would always be more than sufficient to feed the world s population.
B) that the world s population would eventually outstrip food supplies.
C) that population growth was good for the world.
D) that population growth would eventually lead to an increase in the quality of life for
everyone.
32) According to many economists, as nations become wealthier, what happens to family sizes?
A) They increase. B) They decline.
C) There is no effect. D) They increase, but later in life.
33) When analyzing stages of economic development in the United States, it appears that we have
entered the tertiary stage. This is a stage marked by a shift toward
A) agriculture. B) manufacturing.
C) services. D) population increases.
34) Which of the following factors are considered by economists who study economic development
to be directly related to the rate of economic growth?
A) plentiful natural resources B) openness to international trade.
C) an educated population D) All of the above are correct.
35) All of the following are keys to economic development EXCEPT
A) an educated workforce.
B) establishment of a system of property rights.
C) minimizing creative destruction.
D) open economies.
36) Which of the following factors would economists consider key to economic development?
A) expansionary monetary policy
B) establishing a system of property rights
C) policies that promote consumption expenditures by households
D) All of the above are correct
37) Limiting protectionism means
A) reducing trade barriers. B) reducing corruption.
C) reducing consumer fraud. D) reducing political dishonesty.
38) Which of the following do development economists NOT recommend to nations seeking to
increase their rates of economic growth?
A) protecting home producers from international competition
B) letting creative destruction run its course
C) promoting increased education
D) promoting private property rights
39) An educated populace contributes to economic growth because
A) schools provide many jobs for teachers.
B) education allows workers to develop skills that increase their productive capabilities.
C) educated people are more likely to live in poverty.
D) educated people understand the importance of protectionism.
40) Institutions and laws, such as patent protection, that foster innovations lead to economic growth
because they
A) allow the government control of the innovations.
B) give confidence to inventors that they will profit from their innovation.
C) give confidence to consumers that the products they buy are safe.
D) give businesses loans to buy new machinery.
41) According to the United Nations, the largest expected growth in population for the coming
decades will occur on which continent?
A) Europe B) South America C) North America D) Africa
42) It can be argued that Thomas Malthus
A
n Essay on the Principle of Population statement that
population growth will always outstrip food production has been discredited due to
A) increase in the world wide farming population.
B) less world wide consumption of grains.
C) improvement in technology of food production.
D) increase in food processing facilities.
43) Of the following, which best explains why Thomas Malthus was incorrect in his prediction that
population would outstrip food supplies?
A) Malthus failed to realize that that human population would increase considerably.
B) Malthus failed to recognize that economic growth is accompanied by smaller family sizes.
C) Malthus incorrectly believed that economic growth would reduce birthrates.
D) Malthus incorrectly predicted that modernization would increase the demand for children.
